All Forum Posts by: Bryan Casteel

Can you explain a little more about the types of deals that are coming to you from Realtytrac? I assume from your message that they are foreclosure deals of some sort. You could learn a lot about foreclosures on this site and also on foreclosure.com. I don't have much experience with foreclosure.com, but it has been around a long time.

I am absolutely in agreement that you would need a property manager for an out-of-state rental, but if you are going to be looking, maybe a little larger unit place would better be able to support the expense. In order to get a property at a low enough price to support the management, as Landchasers says, you are going to probably have to make a lot of offers. That could be a difficult task if you are having to travel to the area to look at places.

One option for finding the right deal could be to start a direct mail marketing campaign to owners of multi-family properties. You could discuss the situation on the phone with them and have the deal sketched out before even going to see the property. That could cut down on your travel expenses.

Well, that sounds like a decent cash flow on a single property if your numbers are correct. You should expect that you may have to take a little less, but there seems to be some cushion room there.

What is a "leapfrog" property?

You need to make sure that you set aside money for maintenance and repairs on the property. If the rent is $1000 per month (just a round number), you should probably set aside about 3X that amount for unexpected repairs or a long vacancy between tenants. Plus, every time a tenant moves out you will have to do some painting and maybe carpet.

If you put aside the cash reserves and feel good about your numbers, you probably should jump in. It will be a great education if nothing else.

I always do a full workup on each tenant application. I have been using MrLandlord.com to run the credit, eviction and criminal checks. I don't screw around when it comes to tenants and they fill out a long application and they give me $20 for the application fee. The cost from MrLandlord.com is around $18 or $19. If I find any discrepencies, I either throw out the application or confront the potential tenant for an explanation.

Well, as far as landlording goes, it would be easiest to get started in a building that you live in for sure. You can stay on top of things pretty well. The most important part is to heavily screen tenants before renting so that you weed out the bad apples. This approach would really help your personal cash flow and you would learn about that aspect of investing. There is no better way to learn than to jump in.

juzamjedi, if you are reading this, what are your thoughts on buying a multi for your first deal and handling renters?

As far as generating an extra $3K to $5K per month. It would be a long process to get up to that level in creative deals, but it is certainly possible. If you assume that you are going to get, say, $200 per month cash flow per property, that would be 15 to 25 properties. In your 15 hours per week, if your goal was to get one deal a month, you would be doing really well by the end of your 2nd year. You also would be getting a small chunk of cash when you lease/option the property (option premium) and a large chunk of cash when the property is finally purchased. These chunks of cash could be used to reinvest into your business.

Another option that is a little more "hand-to-mouth" would be to try to wholesale one property per month that had $3K to $5K profit for you. The reason that I say it is hand-to-mouth is because there is no cash flow stream and if you don't get a property that month you don't get paid. It is very possible to do though if you start networking with investors that would buy your deals. I work with a couple investors in Cincinnati who wholesale several properties every month. I personally get into 3-4 deals per month, but I am doing it full time.

Mede, since you are trying to maximize your cash flow maybe you should keep your eye out for a good deal (or a creative deal) on a multi-family building that you can live in and have the renter(s) in the other unit(s) pay your PITI for you. As a renter now, you are paying someone elses mortgage - why not turn the tables?

Very good question. You raise a great point about trying to sell an existing home in an area where there are new homes being built. This is a problem that many people run into when they buy one of the first homes in a new subdivision and then try to sell it before the subdivision is still being built. It is very difficult to sell a "used" home in a market of new homes.

The resell prices of brand new homes in subdivisions that are still being built usually drops a significant amount until the subdivision is complete. Buyers are considering a lived-in home versus a new one that they can have some choices on things like special features, colors and carpets. Also the builders will usually offer some cool incentives to the buyers with rate buy-downs and free extras. Once the subdivision is done, the prices of the "used" homes usually comes back up.

Mede,

I do not have any idea on how the rules change in Canada versus the US. As long as you can get good advice for Canadian laws, one way to generate the cash flow you are looking for is to find properties to purchase on lease/option, land contract or subject-to and then sell them to other people on a lease/option. You should have a profit at the beginning when you get an option premium (downpayment) and some cash flow while you hold the property. When the buyer converts the option, you should have a nice payday as well. This takes very little capital as long as you search hard for the right deals (i.e. no money down, very little work to do to the home, good market for rentals).

chrismc, is the house that you are looking at the same type of house as the other ones that are selling for over $400K? You need to make sure that you can sell it when you are done. The numbers look very good and if they are correct you should be able to find someone to help with the finances. As Geniec said, you can shoot for an even lower purchase price if you feel there is little competition right now. Do your homework and if it is all solid, then pull the trigger.

Amsha, the numbers look decent if they are correct. What do you know about the area. Are there buyers looking for property in the area that you can sell to? You don't want to miss a good deal, but make sure you are getting into something that you can get out of. Other options:

- Fix and then refi out your money, then rent the property for cash flow
- Get house under contract and find another investor to buy the contract from you for $3K - $5K